Help?! I am regrouting the shower and found caulk under grout, tiles falling off

I am new here. A couple of weeks ago, the soap dish fell off the wall. So I bought a new one. I had been noticing that grout had been occasionally flaking off. So, since I had to grout the new soap dish anyway, I decided to regrout the whole thing. When I started removing the grout, I discovered that there is caulk underneath. So I started scraping it out with a box cutter. Then tiles started falling off. I think this installation was done when the house was built in the 60s. They used some brown substance to adhere the tiles to the wall. I have done a couple of tiling projects before. About 20 tiles have come off. At this point I am not sure what to do. I haven't been able to remove much of the brown substance from either the wall or the back of the tiles. I am afraid that if I use thinset to put the tiles back, it would be raised and the grout lines are very tight. Am I going to be able to repair it or am I now stuck with ripping it all out and starting over? I've tried to attach photos.

It looks like mastic (a glue) and I cannot tell what the substrate that it is mounted on. Take something like an awl and poke at the board behind - if it is soft, it may just be drywall, and the only hope is to tear out the surround and start over - possibly after fixing any rotting studs that may be there. This is a good example of why you should not use mastic in a tub/shower surround - in fact, there are very few places where mastic is the better thing to use! It looks like the mastic had started to skin over before they placed some of the tiles - done well, it would have good coverage on the whole tile.

I think the substrate is some sort of cement. It is hard. I took the ring off around the shower handle and poked at it there, it seems to be about an inch thick and hard like cement. I'm not sure what the black stuff is. What are my options?

It could be a mudded wall, but if they went to the trouble to mud it, it would be unusual to then use mastic on it. You may be able to scrape or scarcify the crud that's on there, then I'd use thinset to either reinstall the tile, but if that may fell off, I think I'd rather remove them all and start over. Your call. There are a few oscillating tools with diamond cutting edges that might make quick work of it, but unless you get a cheap one from say Harbor Freight, a decent one costs a lot of money for what may be a one time use.

Thank you for the help so far. I decided to pop off all the tiles and put up new tiles with thinset. The substrate is cement of some sort that was applied directly to the wall somehow. I think you said "mudded". There appears to be a thin layer of tar over the cement, then the mastic is over that.

1. Do I have to remove the mastic? If so, how much? What would be the best surface?
2. When I do remove the mastic, some of the tar has been coming off. Do I need to replace this with something? Or can I just start laying tile?

I have been using an oscillating tool that I already had with a scraping bit. The mastic is coming off in chunks in some spots and scraping off in others. Removing it will take some time even with the tool. I'm hoping that I can get away without removing it. Do you think it would be okay as long as I can run a scraping tool over it and its not loose? Is there an easier way to remove it?

The first pic is a close up of an area where the tar came off. The second is a close up of the faucet hole that shows the wall construction.

I would consider covering the walls with a solid surface material and then re-tile the floor. It's gonna be awfully disappointing if you tile those walls and it falls apart or leaks a few months later.

It must be a hot mop. The large trowel lines you see in the overall is the black stuff. The black stuff is not flexible or brittle. For the most part the black is well adhered to the wall. The brown stuff is over top of the black and has smaller trowel lines. If it is a hot mop, do I have to get it redone?